Amer­ica’s Con­se­quences for the Trade War

Im­pos­ing more tar­iffs on China will inevitably lead to more trou­bles for the United States.

China Pictorial (English) - - Contents - Text by Huo Jian­guo The au­thor is vice-chair­man of the China So­ci­ety for World Trade Or­ga­ni­za­tion Stud­ies.

In pur­suit of trade pro­tec­tion­ism, the United States has launched a se­ries of trade wars around the world which will not only prove ad­verse to the long-term de­vel­op­ment of the U.S. econ­omy, but also leave a se­ri­ous neg­a­tive im­pact and cause de­struc­tion to the re­cov­er­ing global econ­omy. The U.S. has be­come a chal­lenge and threat to the ex­ist­ing rule­based mul­ti­lat­eral trad­ing sys­tem. U.S. hege­mony has raised op­po­si­tion and crit­i­cism from other ma­jor coun­tries. For starters, this pol­icy choice of the U.S. is a backpedal. Open­ing and free trade are trends of the times and the goal of in­ter­na­tional mul­ti­lat­eral trade or­ga­ni­za­tions, and the prin­ci­ple of fair com­pe­ti­tion is gen­er­ally ac­cepted by all coun­tries. Con­sid­er­ing the de­vel­op­ment of in­ter­na­tional trade in the wake of World War II, the U.S.’ tar­iffs on prod­ucts on the Sec­tion 301 list from China and steel im­ports from the Euro­pean Union and other coun­tries op­pose the ba­sic prin­ci­ples of free trade. They re­flect Trump’s un­con­ven­tional style and the ad­ven­tur­ous be­hav­iors of the ad­min­is­tra­tion. This move is bound to re­ceive con­dem­na­tion and op­po­si­tion from other ma­jor economies and con­se­quently cause the U.S. to suf­fer eco­nomic losses as well as be­ing forced into iso­la­tion.

More­over, the pol­icy of trade pro­tec­tion­ism ben­e­fits none but hurts Amer­ica it­self. The U.S. should have learned from its dis­as­trously trade pro­tec­tion­ist pol­icy of 1930—tax­ing steel and alu­minum alone di­rectly led to a sharp rise in do­mes­tic steel prices in the coun­try, which caused an across­the-board rise in pro­duc­tion costs and prices. After the in­tro­duc­tion of counter mea­sures from other coun­tries, af­fected ex­port­ing in­dus­tries of the U.S. will face even worse con­di­tions. Once Sino-amer­i­can bi­lat­eral tax­a­tion is im­posed, a sin­gle sanc­tion against Amer­i­can agri­cul­tural prod­ucts could dec­i­mate the economies of any num­ber of spe­cific U.S. states.

The U.S.’ choice to re­strict im­ports will dam­age Amer­i­can ex­ports and ad­di­tional im­port tar­iffs will lead to a rise in do­mes­tic prices and af­fect do­mes­tic con­sumer spend­ing. With the rise in do­mes­tic prices in the U.S., the Fed­eral Re­serve will be forced to raise in­ter­est rates to ap­pre­ci­ate the dol­lar. Ap­pre­ci­a­tion will re­sult in a large deficit in the U.S. cur­rency ac­count, which will in turn suck the life out of the re­cov­ery process of the U.S. econ­omy. When a new round of crises ar­rives, Trump’s con­fi­dence will likely evap­o­rate quickly.

At the end of the day, the U.S. will inevitably be caught in more trou­bles. If Trump re-raises on his con­ven­tional think­ing as the self-pro­claimed mas­ter ne­go­tia­tor has been prone to do, the avail­able moves will soon de­volve from call or raise to fold and cash out.

Newspapers in English

Newspapers from China

© PressReader. All rights reserved.